Primark to pay $10 million more to victims of Bangladesh factory collapse

Disaster prompts clothing industry to improve safety standards

By Emma Thomasson

03/18/2014|labour-reporter.com|Last Updated: 03/18/2014

BERLIN (Reuters) — British clothes retailer Primark will pay a further $10 million in compensation to victims of the collapse of a Bangladeshi factory last year that killed more than 1,100 people.

The disaster has galvanized most of the clothing industry's big names to work together to improve safety standards but many brands have shunned a fund that is trying to raise $40 million for the over 2,000 people injured and the families of the dead.

Campaigners are demanding that 27 brands linked to factories in the Rana Plaza complex should contribute to the fund run by the International Labour Organisation (ILO) by the first anniversary of the Apr. 24 collapse.

Primark has already paid $2 million in short-term financial support and food distribution. It said it would pay out the extra $10 million in long-term compensation — $9 million directly to the 580 workers of its supplier in Rana Plaza or their dependants, and another $1 million to the fund.

It said cash payments to the workers of its supplier, New Wave Bottoms, would begin this week, with the amount to be paid based on estimates of lost earnings for the dependants of those killed and on the level of disability for those injured.

"With the first anniversary of Rana Plaza fast approaching, we are determined to meet this responsibility to workers in our supply chain. We are therefore pleased to be in a position to now press ahead with payments," a spokesman said in a statement.

Rock-bottom wages and trade deals have made Bangladesh's garments sector a $22 billion industry that accounts for four-fifths of exports, with around 60 per cent of garment exports going to Europe and 23 per cent to the United States.

Owned by Associated British Foods, Primark's low prices have helped it expand to more than 250 stores in Britain and Europe. It urged other retailers to donate to the industry fund so it could pay out in full to all victims.

Campaigners from the Clean Clothes Campaign and trade unions IndustriALL and UNI Global Union last week called on Primark to pay into the ILO-run fund, saying that separate voluntary corporate schemes were less effective.

"There is a long way to go before the $40 million needed to make payments to all workers is found," they said in a statement.

The claims process for the fund is due to start on March 24. Campaigners said only a few brands have so far publicly pledged initial donations: Canada's Loblaw, Britain's Bon Marche and Premier Clothing, Mascot of Denmark and Spanish chains El Corte Ingles, Mango and Zara-owner Inditex.

Some of the brands supplied from Rana Plaza have said they will not contribute as their production was outsourced to the factory without their knowledge, or ended some time ago, while others say they prefer to pursue their own compensation plans.

About 3.6 million of Bangladesh's 155 million people work in the clothing industry, making it the world's second-largest garments exporter behind China.